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Offshore Wind Farms in Japan

With the world's 6th largest sea space, Japan's long-term potential for offshore wind energy is estimated by the Japan Wind Power Association to be approximately 600GW. Actual investment in offshore wind projects, however, has been extremely limited. In spite of this potential, Japan boasts only 49.7MW of offshore wind installed capacity using 28 turbines at 8 locations. The relative scarcity of offshore wind farms in Japan is reflected in the somewhat nascent nature of the legal framework surrounding deep-water wind projects. However, Japan's commitment to expand the share of renewables (and in particular offshore wind) in its overall energy profile is attracting increased interest from prospective international wind farm developers.

Japan's recent push towards expanding renewable energy development is a direct result of the 2011 Fukushima Daiichi Nuclear Power Plant meltdown. The Fukushima tragedy brought Japan's use of nuclear power, which had been nearly 25% of total electric consumption, to a virtual standstill. In its place, Japan scrambled to encourage growth in the renewable energy sector with the passage of the Act on Purchase of Renewable Energy Sourced Electricity by Electric Utilities (the "Renewable Energy Act").

The Renewable Energy Act represents a qualified success. In the five years since its enactment, the share of non-hydro renewable energy as a proportion of Japan's overall energy portfolio has shown a marked increase. But nearly two-thirds of the growth in renewable output has been confined solely to photovoltaic energy development. Experts and policymakers agree on the need for diversification in Japan's renewable energy profile. Given a political climate hostile to re-commissioning of dormant nuclear power facilities, the push to encourage other renewable energy development (including offshore wind) is even more pronounced.

Recent revisions to the Renewable Energy Act, coupled with certain policies and practices of Japan's Ministry of Economy, Trade and Industry ("METI"), aim to encourage further growth in renewable energy generation with a goal of raising the share of renewable energy (including hydropower) from 12.2% in FY2014 to 22%-24% by 2030. The Renewable Energy Act's amendments clarify the process of renewable project development, especially at the METI certification stage. Further to these amendments, Japan's highest feed-in tariff ("FIT") (currently 36JPY/kWh, excluding tax) has been assigned to offshore wind projects. This favorable offshore wind FIT rate will apply to any offshore wind projects that are able to obtain METI certification by the end of FY2019.